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Jun 2021

Supreme Court Says Being Listed as a Terrorist is ‘No harm.’

Posted by / in Blog, Weekly Posts /

Supreme Court Says Being Listed as a Terrorist is ‘No harm.’

Last Friday, in a case called TransUnion v Ramirez, the Supreme Court said the Fair Credit Reporting Act cannot give you the right to sue TransUnion for putting your name on their OFAC terrorist warning list. Led by Justice Brent Kavanaugh, a 5 to 4 majority held that people have no right to sue unless they can prove TransUnion actually showed someone the list with your name. TransUnion just putting you on the list isn’t enough.

Justice Clarence Thomas, considered the court’s most conservative Justice, strongly disagreed.  He said that the law as written clearly covered TransUnion’s OFAC warning list.  Justice Thomas often says it’s the job of the courts to read and apply the law–not re-write it.  He said the court was re-writing a law they didn’t like.

Here’s the Rest of the OFAC Story

Besides the credit report you know about, TransUnion keeps and sells an “OFAC warning list.” OFAC stands for Office of Foreign Asset Control. It’s the Treasury Department list of terrorists, international drug kingpins, illegal arms smugglers, and other threats to national security.  People can’t have have money in an American bank or own any property in America if they are on that list.

TransUnion claims they matched that Treasury Department list with their list of Americans who have credit reports. That’s the TransUnion OFAC warning list.

The government keeps an OFAC list. TransUnion claims they matched that list with people who have American credit reports.

TransUnion was unable to prove that ANYBODY on their OFAC warning list was actually on the government OFAC lists of terrorist, drug kingpins and arms smugglers.

 A guy named Sergio Ramirez found out he was on the TransUnion OFAC warning list when he went to a buy a new Nissan in 2011.  The finance manager told him that he couldn’t buy a car. He couldn’t buy a car because “he was a terrorist.”  (The dealership then turned around and sold the car to Ramirez’s wife.) 

Ramirez knew wasn’t a terrorist or arms dealer. So, he sued.

The Ramirez trial lasted six days. Turned out that TransUnion had misidentified 8,165 people, falsely labeling ordinary consumers as “threats to national security.”

The jury agreed TransUnion was in the wrong. They awarded $7337.30 to each person on the list. $60 million total. (Do you think the $7337.30 was too high? The jury found TransUnion had been sued for this exact same thing way back in 2005, and did almost nothing to fix the problem.) 

No Harm, no Foul

The Supreme Court said only 1853 people out of the 8165 had the right to sue. Those 1853 people could prove that TransUnion had sent out their OFAC warning when those people applied for credit. (The trial only looked at a seven month period.)  The others didn’t apply for credit during those seven months.  So they had no right to sue.  “No…harm,” said Justice Brent Kavanagh, no foul.

Justice Thomas hit the ceiling. 

“TransUnion generated credit reports that erroneously

flagged many law-abiding people as potential terrorists and

drug traffickers… Yet despite Congress’ judgment

that such misdeeds deserve redress, the majority decides

that TransUnion’s actions are so insignificant that

the Constitution prohibits consumers from vindicating

their rights in federal court.”


A Business Built on Lies

The three liberal justices went on to point out one other angle. TransUnion was sending out false information because they made money. TransUnion couldn’t prove that anybody among the 8165 people in their OFAC warning list was really on the State Department’s official OFAC list!  (Would any actual terrorist or wanted drug kingpin come to America to open a credit card or buy a car? Would they do it in their own name?) 

TransUnion was making money selling a list that was totally inaccurate!  Here’s what the 9th Circuit said: “TransUnion’s misconduct was repeated and willful. TransUnion used name-only OFAC searches for more than a decade, resulting in thousands of false positives and not a single known actual match identified.” 951 F.3d 1008, 1036. Not s single known actual match.

According to the liberal judges, the TransUnion OFAC warning list was business built on lies.

Two Ways This Affects You After Bankruptcy

The rule that Justice Kavanaugh laid down here goes beyond TransUnion and OFAC. Justice Kavanaugh said, and the Supreme Court majority agreed, that just because Congress says you have a consumer right does not mean you can sue to enforce it. You can’t sue somebody who might violate your rights; they have to actually do it first.

That obviously applies when you, like Mr. Ramirez, need to correct credit report mistakes.

Improving your credit score is one of the important five ways bankruptcy gives you a fresh start.  That’s why I tell everybody to check your credit report after the bankruptcy discharge. Making it harder to sue the credit bureaus doesn’t help you make the most of your new start.

(After-bankruptcy credit reports are now usually right–they didn’t used to be.  Because they are usually right, you have to dispute wrong info at least twice, before you can sue to have it corrected. Now, you probably also need to wait until you’ve applied for credit and been turned down. And even then, how can you prove you were turned down because of the error on your report, instead of the bad history from before you filed bankruptcy. You can see the problem.)

Stopping creditor harassment

Stopping creditor harassment is another way bankruptcy give you a new start. But it doesn’t always work as it should.

Just this past week, Zarah got a hate letter from a debt collector, threatening to file court papers on a debt that was cleared by her bankruptcy. That’s an obvious violation of the bankruptcy law. But are we allowed to do anything about it? Did Justice Kavanaugh just say we can’t complain about the threat? Do we have to wait until they actually do send her court papers?

Some judges do not want to be bothered by “insignificant” consumer complaints. Most businesses don’t want to be sued.

So, when you and I try to defend your rights, the credit bureaus or debt collectors can just say, there’s “no harm.”  They can use Justice Kavanaugh to tell you the door to the courthouse is locked.                         



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Robert Weed has helped fifteen thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.